The Fundamental Fallacies of Free Trade

(This historic book may have numerous typos and missing te...)

This historic book may have numerous typos and missing text. Purchasers can usually download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1906 edition. Excerpt: ... THE TRADE FALLACY In the first of these addresses I endeavoured to bring out the essential difference between the individual and the public point of view in economics--a difference as profound, I suggested, as that between the old Ptolemaic system of astronomy, which regarded the earth as the fixed centre of the universe, and the Copernican, which fixed the centre, at any rate of our planetary system, in the sun--and to show that the recognition of this distinction at once destroys the whole general argument in favour of laisser faire in economics as in any other department of human activity. Last time I examined the Free Trade or Orthodox theory of production and the arguments against interference, by tariff or otherwise, based upon it, and showed how the same fallacy of mixing up the individual and public aspect of economic issues underlay it. But in this case the fallacy was not so easy to detect, as it lay, not so much in the argument itself as in the use of the terms employed, especially in the use of the word "capital." I devoted some time to analysing the "terminological inexactitude" of Adam Smith, and of his school, and to showing that the whole of their main argument against protective regulations is based on the assumption that the volume of the national industry is determined by a fixed inelastic quantity of "capital" in the same way as the individual manufacturer's enterprise is limited by the fixed capital he can save or borrow. I showed, too, that the same individualist fallacy in a slightly different form underlies the Free Trade conception of population as a fixed number of individuals looking out for the most profitable employments available at the moment, instead of what it really is, when looked at broadly, an elastic...

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